LCCI weighs in on budget measures, economic outlook

LAHORE: The Lahore Chamber of Commerce and Industry (LCCI) has welcomed the federal government’s decision to increase the defence budget, calling it the need of the hour in the wake of the successful Bunyaan-um-Marsoos operation against India. It also expressed support for the withdrawal of tax exemptions for the Pata/Fata regions of Khyber Pakhtunkhwa and Balochistan, as well as the inclusion of online businesses in the tax net.

LCCI President Mian Abuzar Shad, accompanied by other office bearers and former presidents -- including Vice President Shahid Nazir Chaudhry, Mian Anjum Nisar, Muhammad Ali Mian, former senior vice president Ali Hussam Asghar, and former vice president Faheemur Rehman Sehgal -- expressed concern over the performance of the energy minister, citing issues of sectoral mismanagement.

They pointed to a lack of coordination with stakeholders and statements that, in their view, have contributed to uncertainty for businesses and people. The chamber also noted the absence of transparency regarding payments to independent power producers (IPPs), and questioned the decision to import Rs400 billion worth of petrol, saying it had negatively impacted local refineries.

Leghari was further criticised for importing petrol worth Rs400 billion, a move the LCCI said had severely harmed local refineries.Shad acknowledged that some relief had been announced for industry in the budget but cautioned that this may be offset by an anticipated increase in electricity tariffs. He welcomed plans to merge or abolish 45 government entities but stressed the urgent need to privatise all loss-making public sector enterprises.

He highlighted that under-invoicing and Afghan transit trade have cost Pakistan Rs25 trillion over the past 15 years, and that unchecked petroleum imports continue to erode foreign exchange reserves. He also expressed disappointment at the lack of budgetary support for small and medium enterprises (SMEs), the cottage industry, livestock exports and the IT sector -- which exports $3 billion worth of services annually.

Shad endorsed the government’s move to crack down on unregistered businesses, called for a higher allocation for water and dam projects, and supported tax relief measures for the salaried class and the real estate sector. However, he proposed discontinuing the Rs5,000 banknote to aid economic documentation and criticised the lack of clear steps to broaden the taxpayer base.

LCCI Senior Vice President Engr Khalid Usman said the finance minister’s budget speech failed to provide clarity for most sectors. He highlighted the introduction of a 6% tax on vehicles with engine capacities between 660cc and 1000cc, calling it a burden on the middle class. Usman also termed the 0.5 per cent reduction in the super tax negligible, given that Pakistan’s tax rates are already the highest in the region.

He noted that energy costs are so high that the country now has surplus gas, and called for bringing gas and electricity tariffs into alignment to boost industrial activity. A more detailed assessment of the budget, he said, would follow the release of the Finance Bill.

Former LCCI president Muhammad Ali Mian remarked sarcastically that the budget was “so nice that it couldn’t be understood.” He criticised the increased discretionary powers granted to the Federal Board of Revenue (FBR), which he said were unwarranted.

Mian Anjum Nisar said the budget should have prioritised investment promotion and expressed disappointment over the low allocations for industry, agriculture, and water resources. He warned that the rising cost of doing business had not been addressed, and that the already burdened tax base was being overstretched.Faheemur Rehman Sehgal stressed that the budget should have been prepared in consultation with the business community.